Graduating from college opens a whole new world of possibilities. After the years of sheer hard work, sacrifices, with a good dose of pain, laughter, and tears, graduation becomes a moment of celebration and joy. Indeed it concludes the end of a long season that marks the beginning of an exciting new journey in a person’s life.
After the initial euphoria has dissipated, the hard, cold reality finally sets in.
This isn’t a time for you to spend restless days under a shady tree chatting on your favorite topic and sharing a few giggles with your good friends. You are all on your own now, at last. You are free to do whatever you want and more importantly, you are now financially responsible for everything that goes on in your life and that includes paying back your student loans.
“Ah! Darn those loans!” But like it or not, those monthly payments have to be made if you do not want creditors to come haunting you every step of the way or knocking at your doorstep at times when you least want them to. If you don’t pay though, you can even end up facing wage and tax garnishments.
To make matters even worse, those loans come at different interest rates and you may be getting a little overwhelmed trying to maintain everything in perspective, not to mention the confusion of getting into a new phase of life that will certainly bring its own confusion and some initial disorientation. You may ask, “Is there a way to reduce the burden on student loan debt?” That answer is a YES!
Student Loan Consolidation
Sadly, there isn’t a magic wand that you can wave and make all those debts disappear into thin air but there is a systematic and intelligent way to manage your multiple loans with varying rates. You can achieve this by consolidating them into one single loan with one servicer. If you are wondering how this will help you in the long run, here are just some of the benefits of student loan consolidation.
Lower Monthly Payments
Student Loan Consolidation allows you to extend the term of the payment beyond the normal ten year period. Depending on the loan amount, you can choose to extend it for up to twenty years, making the monthly installments very affordable especially when you are just starting out in the workforce. You can even apply for an income-driven payment program now! This lets you lower your monthly payments based on your income and household size. Can you imagine that, a loan payoff that is structured around YOUR income?!
Ease of Payment
It is a lot easier to pay just one creditor instead of paying multiple lenders at one time. No longer do you have to make separate payments in different values at the end of the month.
By consolidating all your smaller loans into one bigger loan, you can benefit from one interest rate instead of having to juggle with different rates from different lenders.
Consolidating all the loans will also reduce the number of trade lines showing on your credit report, resulting in a positive mark on your credit report. It even appears as if you personally paid them off yourself (another positive).
Makes it easier to qualify for larger purchases
When you go to buy something like let’s say a car, they look at your other bills. This shows them how much you can afford and is called a “debt to income ratio”. Obviously, the larger debt you carry reflects a larger payment needed towards it. If your income cant match it though, then you won’t get approved for that purchase. However, After you consolidate your student loan debt you can then apply for an income-driven program, Allowing you to receive a lower monthly payment. Thus, decreasing your “debt to income ratio” and getting you that new car!
Starting your new life after graduation doesn’t mean you should burden yourself with the task of paying the dreaded student loans while sacrificing the wonderful period of life steeping into the workforce and earning your own income. With proper management and the right knowledge, you can make the right steps to manage your resources better without sacrificing the quality of life you deserve.
To learn more about student loan consolidation and determining your eligibility for the available income driven programs, Call and speak with a certified “Guidance counselor” now!